Buried inside the almost 1,000 page One Big Beautiful Bill Act (OBBBA) is a section that reverts the reporting requirements on Form 1099K back to their pre-American Families Rescue Act Level. The 1099K is a form issued by credit card companies and online retail platforms that keeps track of the annual sales that are processed on behalf of entrepreneurs.
The limit for filing this form had gone down to $600. In other words, if you processed more than $600 in sales over a year, a 1099K would have been sent to the government informing them of the sales activity.
But the process became a political football. Even though the law had been passed, the IRS refused to enforce it.
One year the Service said that they’d enforce a limit of $10K and then changed their minds. Another year they said they’d enforce a limit of $5,000 in sales and ended up not enforcing it again.
The limit has been permanently set at $20,000 in sales or more than 200 transactions in any year. If your sales activity is under those amounts, no 1099K will be sent either to you or to the government.
Let me leave you with this…
Please pardon me for being the snarky old accountant I was born to be, but I just don’t understand any of this. Not sending a 1099K into the government does nothing but encourage people to evade income taxes.
I can’t tell you how many conversations I’ve had with clients over the years where they refused to report internet sales activity that wasn’t reported up the chain. Make no mistake about it.
Whether those sales are reported or not, they’re income that must be included on your income tax returns. Each individual event is punishable by up to 12 months in a federal penitentiary.
It’s the easiest thing in the world to prove.
They look at your bank accounts or online to see that you are receiving income. They then look at your income tax return, see that you didn’t claim the income, and guess what?
You’re guilty. End of story. Fahgetabadit.
And clients who want to argue with me about whether or not they have to pick up income that isn’t reported to the government always end up being ex-clients. Jail cells normally hold more than one person, and I’m not going.
If you have questions, you know my number.
We’re all going to get through this. Let’s get through it together…
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
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